By Ana Vidaurre
If you are experiencing financial problems and are having trouble keeping track of your debts and bill paying, you may be considering looking into nonprofit debt management to avoid high fees. However, the fact that a debt management service is or claims to be nonprofit does not necessarily mean that it is superior or cheaper than a for profit service.
Debt management plans (DMP) are offered by credit counseling agencies, but regardless of their profit status, these agencies vary significantly in quality, so read on for a lowdown on credit counseling services and their DMPs.
An honest credit counseling company should assess your financial situation, help you create a budget and figure out a plan to help you get out of debt before recommending a debt management plan.
If your counselor is unable to come up with a way to pay off your debts by cutting down your expenses and finding additional income, he will probably suggest that you enroll in a debt management plan. Such plan will require that your counselor try to persuade your creditors to lower your monthly payments and sometimes your interest rates.
Whether you decide to participate in a for profit or nonprofit debt management program, keep in mind the following:
- Your secured debts, such as your car loan, home equity loan and mortgage, are generally not included.
- Some of your creditors who participate in the plan may notify the credit bureaus that you are paying through a DMP. This may hurt your credit.
- Every month you should confirm with your counselor that the payment was made.
- You should read your monthly statements to verify your account was correctly credited.
- Not all your creditors may agree to participate in the plan, if this is the case, it will not benefit you to enroll.
- You are not allowed to use your credit cards while enrolled in the program.
- If you have an unexpected expense, you cannot send a smaller payment, as a result many people end up dropping out of the program.
- Be sure that a credit counseling service is really nonprofit by asking to see its IRS approval of nonprofit status document.
As you can see, even if you participate in theses plans, you still have to stay on top of your finances to protect yourself. The most popular complaint among people who participate in DMPs through credit counseling agencies, is that payments are either skipped or sent late, and as a result debt balances increase due to late fees.
In conclusion, if you sign up with a legitimate, honest and reputable credit counseling service you can definitely benefit from either a for profit or nonprofit debt management.
However you must do your homework and ask a lot of questions to be sure you do not end up with a much larger debt load.
A. Vidaurre is a personal finance researcher who owns a debt elimination website that offers unbiased reviews of debt elimination products and services as well as user feedback.
To find out more about Care One Credit Counseling, debt settlement and to get a free 32-page download about debt settlement facts visit http://www.debtreliefprogramreports.com
Article Source: http://EzineArticles.com/?expert=Ana_Vidaurre
Are Nonprofit Debt Management Plans As Good As They Appear to Be?
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